French GDP, USA News (Paris, France): Gross domestic product in France fell during the third quarter, following a 0.2 percent drop in the first quarter and stagnation in the second. While economists generally anticipated a 0.1 percent increase, the third-quarter figures disappointed expectations. This performance contrasts with Germany, where GDP grew by 0.2 percent in the third quarter, and Spain, where growth reached 0.6 percent.
Roland Lescure noted that growth has been absent for three consecutive quarters, leaving the French economy at a standstill. Lucile Bembaron, an economist at Asterès, observed that a technical recession was avoided by a narrow margin. Philippe Crevel, director of the Cercle de l’Epargne, confirmed that the economy is not in a technical recession—which requires two consecutive quarters of decline—but remains in real stagnation.
The business cycle dating committee for the French economy (CDCEF) noted that the data point to notably low activity requiring careful attention. Six months ahead of the presidential election, the country is grappling with political turmoil driven by fears of violence and store looting.
Economic Pressures and Inflation
Economic activity is further weighed down by inflation, which reached its highest level since January 2024 due to the conflict in the Middle East, hitting 3.4 percent year-over-year in October according to Insee. The summer decline in activity stemmed largely from a steep drop in exports, with foreign trade subtracting 0.6 points from growth. This contraction was only cushioned by a slight improvement in domestic demand and a positive contribution from inventories.
By the end of September, the growth carry-over stood at 0.2 percent. Marie Leclair, head of national accounts at Insee, explained that achieving the government’s 0.5 percent annual target would require 0.9 percent growth in the final quarter, while reaching the more recent 0.4 percent forecast by Insee and the Banque de France would require 0.5 percent. However, the fourth quarter appears to have started on weak foundations.
Household Confidence and Budgetary Concerns
Household confidence dropped in October to its lowest level in thirteen years, signaling sluggish end-of-year consumption. S&P Global PMI surveys also showed business activity expectations over the next twelve months at a six-and-a-half-year low.
Maxime Darmet, an economist at Allianz Trade, projects 2027 growth to remain capped at 0.5 percent rather than the government’s 1 percent target. Public Accounts Minister David Amiel stated in the National Assembly during budget debates that the news reinforces the need for budgetary efforts to keep the public deficit at 5 percent of GDP in 2027. Economist Sylvain Bersinger warned that mounting debt interest rates could potentially escalate into deeper economic and political crises.
